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photo, Terry Loebs
The use of Automated Valuation Models in home appraisals has taken off, but they are at a preliminary stage of use when it comes to commercial property valuations.
Essentially, this is technology that assesses the value of a property through the use of a defined valuation model.
AVMs "in their crudest forms" started to emerge in the early '90s and they became more improved by the mid-90s, according to Terry Loebs, vice president of Cambridge, Mass.-based Case Schiller Weiss, a Fiserv business unit whose proprietary AVM, Casa, is used for residential property valuations.
Mr. Loebs said, "Today they have begun to reach critical mass, with, by some estimates, being used in typically 10% of all residential mortgage applications."
Currently, the residential AVM market has about 20 contenders, with about five that have "any meaningful market share," according to Mr. Loebs.
Casa itself was introduced commercially in 1995 and the model was called "individual property valuation," at the time, he recounted.
Currently, the model is used in a variety of situations, ranging from a "move-in appraisal" to augmentation of the quality control processes of lenders to ensure that "the quality of the collateral valuation documented in the appraisal is sound."
To determine the estimated selling price of a property, CSW uses various modeling and regression techniques.
"Among other things that those analytics add to the Casa results are compensation for the data lag that is inherent in the data collection process," Mr. Loebs said.
In order to ensure that the data used in the valuation model is current, CSW constantly calibrates Casa.
"Market dynamics are subject to...